The Japanese yen rose against the dollar in what seems to be one way path downward

The US dollar traded slightly weaker against a basket of currencies as investors await today’s Fed announcement due later this morning. It is widely expected that the central bank will cut rates from 1.0% to 0.5% to help battle the worst financial crisis in 80 years. If the Federal Reserve does indeed cut its benchmark rate in half, it will be the lowest level in 50 years. In economic news, US consumer prices fell last month and new home construction all fell to record lows as the recession continues to takes it toll.

The euro traded off its 2 month high as market participants wait for this morning’s US Federal Reserve announcement. In economic news, the European Union’s statistics office reported that employment fell for the first time since records began in 1995. This is further evidence the ECB may need to lower rates again despite recent comments from ECB members. Finally, reports that that European manufacturing and service industries contracted at the fastest pace in 10 years.

The British pound weakened against the dollar and continues to trade at record lows against a basket of currencies. The BOE issued a statement that the United Kindom’s economy has worsened in recent weeks. Forecasts are that the UK bank rates will fall below 1.0% in the 2nd quarter of next year.

The Japanese yen rose against the dollar in what seems to be one way path downward. There is speculation that the BOJ will intervene to combat the yen strength which severely hurt the country’s exports.

The Canadian dollar strengthened against the greenback as oil and gold strengthened. In economic news, Canadian manufacturing shipments fell in September, the largest drop in 10 years. All eyes are focused on the US Federal Reserve announcement later this morning.

Both the Australian dollar and the New Zealand dollar edged up against the greenback on hopes that respective country’s central banks will be less aggressive cutting rates.

The Mexican peso weakened against the US dollar as concerns whether the US will bailout the US auto industry which makes up a large part of Mexico’s export sector.